Robinhood revenues drop as share prices fall 11%. Could a crypto push save it?

Key Takeaways:

  • Retail brokerage firm Robinhood saw a sharp drop in its revenues and share prices
  • Robinhood's total net revenue for the first quarter of 2022 fell 43%.
  • The company announced it is laying off 9% of its workforce despite its acquisition of crypto exchange Ziglu
Retail brokerage firm Robinhood saw its revenues drop 43% in Q4 as it acquired crypto exchange Ziglu and aid off 9% of its workforce.
Robinhood’s total net revenue for the first quarter of 2022 fell 43%. Credit: Robinhood

YEREVAN (CoinChapter.com) – Popular retail brokerage firm Robinhood (HOOD:NASDAQ) reported its revenues fell more than expected in the first quarter (Q1), indicating prolonged losses for the company. After capitalizing on the meme stock mania that saw Gamestop and AMC peak in the spring of 2021, things have gone south. The retail brokerage’s foray into the crypto industry, however, could be a gamechanger.

Robinhood’s total net revenue for the first quarter of 2022 fell 43%. As a result, the company’s quarterly revenue figure came in at $299 million. In contrast, Robinhood had generated $522 million in Q1 of the previous year. 

However, the numbers come as no surprise to industry watchers. The company had also reported a net loss of $423 million (a 49% cent loss per diluted share) for the fourth quarter of 2021. Robinhood’s monthly active users have also fallen by 10% to 15.9 million for March 2022. In March 2021, the company boasted 17.7 million users.

Yet on the bright side, Robinhood narrowed its losses significantly since last year. In the first quarter of 2021, it had reported a loss of $1.4 billion in the first quarter of 2021. One year later, its losses amount to $392 million. Although not a small number, it is a stark improvement from the previous year.

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Bruised and battered, Robinhood lays off 9% of its employees.

After its share prices fell to an all-time low, Robinhood announced it was laying off 9% of its total workforce. The decision came as the company’s stock dropped more than 86% off its most recent high since its trading app’s debut in July 2021. Robinhood’s opening price back then was $38 per share. Today, the company barely finds takers at only $9 a share. 

The company had increased its workforce almost six times from 700 in 2019 to nearly 3800 by December 2021. Robinhood’s revenue growth from around $278 million to $1.8 billion had helped them afford such hirings. However, they are feeling the pressure now. 

“This rapid headcount growth has led to some duplicate roles and job functions, and more layers and complexity than are optimal. After carefully considering all these factors, we determined that making these reductions to Robinhood’s staff is the right decision…,” 

Robinhood Chief Executive Officer Vlad Tenev said in the release. 

According to Tenev, they had to take the decision to improve efficiency, increase velocity, and ensure that the company is responsive to the changing needs of its customers.

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Will going down the crypto route save Robinhood? 

Earlier this month at the Bitcoin (BTC) conference in Miami, Florida, Robinhood released its crypto wallet to 2 million waitlisted users. Although crypto trading has been available on the Robinhood app for about three years, the new wallet allows users to send crypto to other wallet addresses and withdraw funds without any fees. In contrast, its competitor Coinbase charges 1% as a conversion and withdrawal fee. 

However, the app also has drawbacks. It does not allow users to store their nonfungible tokens (NFT) in the app. In addition, it only lets users store a limited list of cryptos and does not support major coins like Solana (SOL) and Binance (BNB). 

Earlier this month, Robinhood showed a slight jump in its share price after it announced it was buying Ziglu. The London-based fintech app is one of the few crypto companies registered with the UK’s Financial Conduct Authority.

Robinhood had early halted plans to launch in Britain. The new deal with Ziglu will allow it to trade in the new jurisdiction. With over 15 million active users, the company will have an impact on the larger crypto environment. In addition, its foray into the cryptocurrency space may also help usher in better days for the company. 

However, analysts at Goldman Sachs do not believe Bitcoin (BTC) can alter Robinhood’s fate. 

“Fading retail engagement, particularly among Robinhood’s lower end consumer customer base, could represent further headwinds. While the company has negotiated much better economics on crypto trading, we see the decline in broader industry crypto volumes largely offsetting this tailwind,” 

 the Goldman Sachs team, led by Will Nance said. 

It remains to be seen if cutting down on employee size and acquiring Ziglu will help Robinhood recover in the months to come.

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Robinhood, Robinhood revenues drop as share prices fall 11%. Could a crypto push save it?

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